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Exam 18: Inventory Management

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Question 1

Multiple Choice

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The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day.Order costs are $20.00 per order,and Stein beer costs $8.00 per six-pack (each case of Stein beer contains four six-packs) .Orders arrive three days from the time they are placed.Daily holding costs are equal to five percent of the cost of a Stein beer case. If he has to order 16 cases of Stein beer at a time,what would be the daily total inventory costs,EXCLUDING the cost of the beer?

A) $3.20
B) $6.40
C) $9.60
D) $12.80
E) $16.00

F) C) and E)
G) A) and E)

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Question 2

Multiple Choice

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If no variations in demand or lead time exist,the reorder point (ROP) will equal:

A) the EOQ.
B) the expected usage during lead time.
C) safety stock.
D) the service level.
E) the EOQ plus safety stock.

F) A) and B)
G) C) and D)

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B

Question 3

Multiple Choice

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In a single period model,if shortage and excess costs are equal,then the optimum service level is:

Inventory _________ is a method that determines the location and optimal level of inven?tory in the supply chain.

Which of these products would be most likely to involve the use of a single period model for ordering?

Given the following information: Order quantity = 40 Expected demand during lead time = 20 units $\sigma$ d LT = 10 desired annual service level = .99 Find: (i)the expected number of units short per cycle (ii)the required ROP

EOQ inventory models are primarily concerned with the timing of orders.

Which one of these would not be a factor in determining the level of the reorder point that includes safety stock?

If average demand for an inventory item is 200 units per day,lead time is three days,and safety stock of 100 units is included,the reorder point (ROP) is:

The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine,which only dispenses $100 bills.She estimates that this machine dispenses an average of 12,500 bills per month,and that holding a bill in inventory costs 10 percent of its value annually.She knows that each order for these bills costs $300 for clerical and armoured car delivery costs,and that order lead time is six days. Assuming a thirty-day month,if she were to order 6,000 bills at a time,what would be the length of an order cycle?

Of the following,which has the highest inventory turns per year?

In an A-B-C inventory system,the typical percentage of the number of types of items in inventory that represent the A classification items is about:

Annual ordering cost is inversely related to order size,as the size of orders decreases the annual cost of ordering increases.

The fixed order interval model requires a larger amount of safety stock than the reorder point (ROP)model for the same risk of a stock-out.

Annual ordering cost is a function of order size.

Ordering costs are usually expressed as a variable cost equal to a percentage of the total purchase cost of an order.

What is not required for distribution requirement planning to establish replenishment schedules between a distribution centre and retail outlets?

The time interval between ordering and receiving an order is called:

Inventory maximization is a method that determines the location and optimal level of inven?tory in the supply chain.

Holding or carrying cost is directly proportional to order size,as order size increases,so does the holding cost.